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The EU Implementation of the Nagoya Protocol to the Biodiversity Convention: A Game Changer or Institutional Paralysis?

Saturday, 07 November 2020
by Dr. Elli Louka, President, Law-in-Action, Princeton, New Jersey, USA
The EU Implementation of the Nagoya Protocol to the Biodiversity Convention: A Game Changer or Institutional Paralysis?
Unimproved germplasm, the way found in nature, and landraces cultivated by farmers around the world for years, were, till the adoption of the Biodiversity Convention,[1] a free access resource. Improved germplasm, by breeding or bio-engineering, on the other hand, is often protected by patents or other sui generis intellectual property rights (IPRs). The power of the seed industry, the industry that has acquired IPRs over most of the improved germplasm, has increased dramatically. Five big companies, Syngenta (owned by ChemChina), Bayer (Germany), Corteva (US, a spinoff of DowDuPont) and BASF (Germany) control a sizeable piece of the total seed market and 90 percent of the agrochemical market. The oligopolistic nature of the seed industry makes improved germplasm often prohibitively expensive for the farmers of the developing countries.

The power of the seed industry and its ability to set the prices for the advanced varieties it produces triggered the seed wars of the 1980s.[2] Developing countries argued that it is unfair to have to pay high prices for these improved varieties. This is because these varieties would have never been developed without the free-access policies to unmodified germplasm and landraces located in international gene banks and often collected from their territories. 

The 1992 Biodiversity Convention and the 2010 Nagoya Protocol[3] to the Biodiversity Convention are based on national sovereignty over genetic resources. Both the convention and its protocol mandate that access to genetic resources must not happen without the equitable sharing of benefits derived from the use and exploitation of resources. This so-called ‘access with benefit-sharing’ (ABS) regime has become the norm for sharing germplasm resources around the world. Equitable sharing means that multinational companies must share the benefits — royalties — they receive from the improved varieties they develop, when using germplasm extracted from developing countries. 

1. Nagoya Protocol

The Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits was adopted in 2010. The protocol was the result of the efforts of the Group of Like-Minded Megadiverse Countries (GLMMC).[4] The group that consists of the countries that possess the bulk of the world’s genetic diversity fought for the interests of the global South all through the negotiations of protocol. The protocol provides that the benefits arising from the utilization of genetic resources or from the application and commercialization of such resources must be shared with the country that provided those resources.[5] Furthermore, access to genetic resources is subject to the prior informed consent (PIC) of the country of origin of such resources[6] and must happen also with the PIC of indigenous peoples and local communities.[7]
   
The protocol establishes an ABS Clearing-House. State parties to the Nagoya Protocol have to provide the ABS Clearing-House with the following information: (1) national legislation and policies on ABS; (2) national focal points and competent national authorities; and (3) evidence of implementing that germplasm resources have been obtained on Mutually Agreed Terms (MAT).  Other information that can be provided includes: model contractual agreements on ABS, tools of monitoring genetic resources and codes of conduct and best practices.[8]
   
The protocol provides examples of the benefits that user countries (typically developed countries) must share with provider countries (typically developing countries).[9] The exact details of benefit sharing are to be specified in bilateral contracts signed between provider countries and user countries. Instead of entering into bilateral agreements, countries can also establish a global multilateral benefit-sharing mechanism.[10] This mechanism can be used to facilitate the implementation of the ABS in transboundary situations (where the same genetic resources are encountered in more than one state) or in circumstances where it is not possible to obtain the PIC of the country of origin.
 
The protocol includes compliance procedures. State parties to the protocol have to take measures to ensure that genetic resources, that are utilized within their jurisdiction, have been accessed in accordance with the PIC and MAT.[11] Parties to the protocol have to cooperate to address situations of non-compliance.[12] It is expected that states will collaborate in cases of violation of domestic ABS legislation or other regulations of the provider country. States must recognize and enforce foreign judgments and arbitral awards.[13]   

Countries have to designate checkpoints the purpose of which is to collect information regarding the PIC, the origins of the genetic resources, the fulfillment of MAT and the utilization of genetic resources.  Ideally, users of genetic resources must obtain an internationally recognized certificate of compliance (IRCC) published by the ABS Clearing-House.[14] This IRCC certifies that a specific genetic resource has been obtained in accordance with the PIC and MAT.  

2. EU Implementation of the Nagoya Protocol

The purpose of the EU regulation[15] that implements the Nagoya Protocol is to increase the trust between the parties to the Nagoya protocol and other stakeholders including indigenous and local communities.[16] It is this lack of trust between the seed industry of the developed world and developing states that has propelled states to adopt the protocol.[17] It is because of this the lack of trust that mega-diverse countries like Brazil, India and Indonesia have adopted the most restrictive bioprospecting legislation. 

The EU regulation centers around the ‘due diligence’ requirement.[18] Users of genetic resources (GR), researchers and companies located within the EU, must ensure that their access to the GR of another state is accomplished in accordance with that state’s ABS legislation and based on MAT. Furthermore, users must seek, keep, and transfer to subsequent users the IRCC, MATs, or other relevant information documents.[19] Due diligence is presumed when users obtain material from registered with the European Commission collections.[20]  The European Commission must establish and maintain a register of these trusted collections.[21] Registered collections cannot accept genetic material that is not accompanied with the required ABS/MAT documentation. Similarly, such collections cannot dispense genetic material without the appropriate ABS/MAT documentation.[22] In other words, a registered, trusted, collection must take on the responsibility of developing and maintaining a chain of title for all the genetic material in its collection. This can be very costly. Because of these costs, most collections have not rushed to become registered collections.

Companies and individuals who receive government funding have to declare that have exercised due diligence by issuing the so-called due diligence declaration (DDD) with regard to the products they develop that contain GR.[23] This DDD must be filed at the stage of the final product development and must be accompanied with the necessary documentation that can be used to verify the DDD.[24] The EU has created the Declare Platform[25] though which users of GR can submit their DDDs.

The industry that has to comply with the EU legislation, primarily the pharmaceutical, agriculture and food industry, has found it ‘complex and burdensome’.[26]  Companies have developed IT tools to help them collect information to track and trace their use of GR throughout their R&D. The costs of developing such IT tools range from EUR 6 000 to EUR 200 000.[27] Companies have to additionally dedicate research and legal personnel to ensure compliance with the regulation.[28] Because the Nagoya Protocol, and the EU regulation that implements it, are deemed burdensome, companies and researchers prefer to source GR from countries with no ABS legislation.[29] 

Even what appear like simple requirements, such as the PIC and MAT, can be a source of complexity. This is because it is often hard to obtain, translate and understand the legislation of provider countries.  The Nagoya Protocol does provide for the ABS Clearing House, through which countries are expected to make available their laws on ABS. Unfortunately, ABS clearing house is not always not-up-to-date.[30] Contacting the national focal points in provider countries, outside the EU, can be difficult. 
Users have to call and write several times before obtaining a response. At this point, the costs of securing PIC and MAT for accessing genetic material in a physical form range from EUR 500 to 10 000 per negotiation. An additional cost is that these negotiations often extend to several months and, in some cases, to two-to-three years.[31] Between 2018-2020, the ABS Clearing House appeared to be taking off, to some extent. About 1 525 internationally recognized certificates of compliance (IRCC) were issued by 22 state parties to the Nagoya protocol. The bulk of those certificates were issued by India (1 008), followed by France (234), Spain (75), Kenya (38) and South Africa (32).[32] 

Other costs associated with the Nagoya Protocol and related EU implementation have to do with ‘scoping.’ Companies and researchers have to figure out whether their R&D falls within scope of the Nagoya Protocol, something that can be very time-consuming. Many organizations have developed IT tools, decision trees, check lists and internal procedures that help them determine whether their research falls within the protocol.[33] This is because they wish to avoid the ‘calamitous consequences,’ the ill-effects on their reputation associated with the unauthorized use of genetic resources.[34] Allegations of biopiracy carry today the same stigma as allegations of industrial piracy or the misappropriation of trade secrets. 

The Nagoya Protocol, in other words, has instilled the fear that the unauthorized use of GR, and potentially their data, will be considered theft. Even countries, like the United States, that have ratified neither the Biodiversity Convention nor the Nagoya Protocol are not off hook. Countries, and their companies, that refuse to abide with PIC/ABS/MAT risk to be seen as exporters of contraband much like the exporters of counterfeit trademarked goods are treated under the Trade-Related Intellectual Property Rights (TRIPs) agreement.[35] One could say, therefore, that the Nagoya Protocol has worked well in altering perceptions of who is the rightful owner of genetic resources as found in nature.

3. Synthetic Biology and DSI

The Biodiversity Convention and the Nagoya Protocol were drafted to address issues related with tangible genetic resources. As a result, they do not directly address the new developments in the field of synthetic biology and digital sequence information (DSI).[36]  Synthetic biology, the ability to de novo synthesize very large DNA fragments, has disrupted the link between the material GR, and the derived information and products from GR.[37] Today, anyone with access to the DSI of an organism could re-construct such organism by using synthetic DNA and other synthetic genetic material. 

Developing countries whose focus has been to assert sovereignty over physical genetic resources have tried to grapple with the synthetic biology revolution, and its repercussions: the fact that the information encapsulated in genetic material can be extracted, used and disseminated detached from the physical dissemination of genetic material.[38] Because of this new possibility, value is generated at the point of using the information extracted from genetic material rather than at the level of physical exchange of GR.[39] Developing countries fear that they may be soon living in a ‘static museum of raw materials’ rather than participate in the big data industry that is empowered by the progress in synthetic biology.[40]

A big question, that has yet to be answered, is whether the ABS regime put in place by the Nagoya Protocol, and implemented by the EU regulation, should be used also to access the information enclosed in genetic resources and its decryption through genetic sequencing.

The difficulties and complexities involved in obtaining genetic material in physical form have led the industry to fight, tooth-and-nail, to exclude DSI from the pincers of the Nagoya protocol and associated EU regulation. Some have argued if an EU-type due diligence is made the norm for obtaining DSI, in other words, if DSI is no longer free and unrestricted, as it is today the norm, but subject to bilateral negotiations under the Nagoya, it would be economically unfeasible, if not almost impossible, to implement the EU regulation.[41]  

On the other hand, developing states are unwilling to accept the dematerialization of their genetic resources made possible by digital sequencing. Developing countries are aware that progress in synthetic biology may render access to physical genetic resources somewhat obsolete. They have argued that extracting information from the genetic resources under their jurisdiction should not happen without their PIC. Extracting information from their genetic resources, without their consent, should be considered digital biopiracy. 

Developing states have called for tracking and tracing the distribution of DSI that happens today through the various databases located primarily in the developed world. Given that most databases double every few years and that many people run searches on them, it has been claimed, though, that it is ‘computationally impossible’ to monitor who is accessing, at all times, digital sequence information.[42] From the moment information is removed from the physical resources, establishing control over the flow of information is not that easy.  

The Brazilian legislation with respect to ABS may provide the proverbial light at the end of the tunnel with regard to how to put together a slimmed-down version of an ASB regime, a version that strips away unnecessary bureaucracy. Brazil first ABS law focused on the control of access to genetic resources.  The law adopted in 2015 focuses, instead, on the control of the economic exploitation of products or reproductive materials arising from access to GR.[43] Benefit sharing is triggered at the moment a product has been developed and it is ready to be used by the final consumer. The law does not focus on who had access to the DSI or who is commercially exploiting the product. It is the manufacturer of the finished product that must meet the benefit-sharing obligation.[44] The economic exploitation of an intermediate product does not trigger benefit sharing. The rationale behind the Brazilian legislation is that countries should change their focus from monitoring procedures to monitoring results. This lifts the bureaucratic burden from research and development and zeroes in on the end of the value chain, the economic exploitation of products.


ENDNOTES
  1. Convention on Biological Diversity, June 5, 1992, reprinted in 31 ILM 822 (1992).
  2. Elli Louka, International Environmental Law: Fairness, Effectiveness and World Order 415 (2006).
  3. Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization, Oct. 29, 2010,  https://www.cbd.int/abs/text/. 
  4. Bolivia, Brazil, Colombia, Costa Rica, Congo, Ecuador, Ethiopia, Guatemala, India, Indonesia, Iran, Kenya, Madagascar, Malaysia, Mexico, Peru, Philippines, South Africa and Venezuela.
  5. Art. 5(1), Nagoya Protocol, supra note 3.
  6. Art. 6(1), id.
  7. Art. 7, id.
  8. Art. 14, id.
  9. Annex, Id.
  10. Art. 10, id.
  11. Art. 15(1), id.
  12. Art. 15(2), id
  13. Art. 18(3), id.
  14. Art. 17(1)(a)(iii), id.
  15. Regulation (EU) No 511/2014 of the European Parliament and of the Council of 16 April 2014 on compliance measures for users from the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization in the Union, L 150/59, 20.5.2014 [hereinafter Regulation 511/2014]. The regulation addresses the obligations of users of genetic resources. It has nothing to do with how EU member states are to regulate access to their genetic resources (GR), as providers of such resources.  The EU member states are free to decide whether to control access to their GR. Ireland, for instance, has decided not to control access to its GR.  On the contrary France, Spain and the Autonomous Regions of Azores in Portugal have controlled access.
  16. Preamble(10), Regulation 511/2014, id.
  17. Analysis of Implications of Compliance with the EU ABS Regulation for Research Organizations and Private Companies, at 22, Milieu Law and Policy Consulting, May 2020 [hereinafter Analysis]
    https://ec.europa.eu/environment/nature/biodiversity/international/abs/pdf/ABS%20Regulation_Report%20on%20Compliance%20Implications%20for%20public%20and%20private%20sectors.pdf
  18. Art. 4(1), Regulation 511/2014, supra note 15.
  19. Art. 4(3), id
  20. Art. 4(7), id.
  21. Art. 5(1), id.
  22. Art. 5(3)(b), id.
  23. Art. 7(1), id.
  24. Art. 7(2), id.
  25. https://subsites.wur.nl/en/show/DECLARE-tool-for-due-diligence-declarations-now-open.htm
  26. Analysis, supra note 17, at 12 
  27. Id. at 14.
  28. Id.
  29. Id. at 21.
  30. Id. at 15.
  31. Id. at 16.
  32. https://absch.cbd.int/search/nationalRecords?schema=absPermit.
  33. Analysis, supra note 17, at 17.
  34. Id. at 18.
  35. Jerome H. Reichman et al., Governing Digitally Integrated Genetic Resources, Data, and Literature: Global Intellectual Property Strategies for a Redesigned Microbial Research Commons 161 (2016).
  36. See generally Margo A. Bagley, Digital DNA: The Nagoya Protocol, Intellectual Property Treaties, and Synthetic Biology (Wilson Center, Dec. 2015), https://www.wilsoncenter.org/sites/default/files/media/documents/publication/digital_dna_final.pdf
  37. See generally Sylvain Aubry, The Future of Digital Sequence Information for Plant Genetic Resources for Food and Agriculture, 10 Frontiers in Plant Science, Aug. 30, 2019, https://webcache.googleusercontent.com/search?q=cache:fP2b4oh0P5cJ:https://www.frontiersin.org/articles/10.3389/fpls.2019.01046/full+&cd=1&hl=en&ct=clnk&gl=us
  38. Jack A. Heinemann and Dorien S. Coray, Draft Exploratory Fact-Finding Scoping Study on ‘Digital Sequence Information’ on Genetic Resources for Food and Agriculture, at 33, CGRFA/WG-PGR-9/18/Inf.14, July 2018.
  39. Id at 34.
  40. Id.
  41. Analysis, supra note 17, at 29.
  42. Sarah A. Laird and Rachel P. Wynberg,  A Fact-Finding and Scoping Study on Digital Sequence Information on Genetic Resources in the Context of the Convention of Biological Diversity and the Nagoya Protocol, at 55, CBD/DSI/AHTEG/2018/1/3,  Jan. 10, 2018
  43. Brazil’s Position on DSI, June 3, 2019, at 8, https://www.cbd.int/abs/DSI-views/2019/Brazil-DSI.pdf
  44. Id. at 4.

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